Long Term Decline in Ag Prices Underway

ROME - Feb 16/05 - SNS -- Agricultural commodity prices are caught in along term decline which threatens food security in some of the world's poorest countries because selling excess food production is often the only source of cash, warns the UN Food and Agriculture Organization (FAO).

According to The State of Agricultural Commodity Markets 2004 (SOCO 2004), many farmers and exporting countries still find themselves trapped by their dependency - producing and exporting more, but earning less than they did in the past.

SOCO 2004 also says that lower prices for basic foods enable many poor food importing countries and their consumers, especially in urban areas, to meet their food needs at lower cost and to gain access to nutritious diets.

While the overall trend in commodity prices has been downward from the late 1990s through 2001, the report shows that prices on world markets have rebounded, or at least levelled off, over the past two years. However, not all commodities have performed the same.

There have been rebounds in cereals, oil crops, dairy products, fibers and raw materials, while horticultural product prices remained more sensitive to market balance and meat prices were disrupted by animal disease outbreaks.

Price recovery has been far more fragile for tropical beverages, sugar and bananas, according to the report, which points out that these are some of the very commodities on which the poorest countries are most dependent for their export earnings.

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